The shared economy or co-living segment is expected to witness recovery in 2022 driven by re-opening of offices, continuing high vaccination and re-opening of colleges in a phased manner, as per a report by professional services and investment management company, Colliers.
Though the pandemic marred the growth story of the co-living sector in 2020, it has already witnessed a sharp recovery in 2021. The co-living segment is expected to have 4,50,000 beds mainly driven by organised players by 2024 – more than double the number of what is there by 2021-end, or 2,10,000 beds.
According to Ramesh Nair, CEO, India and Managing Director, Market Development, Asia, Colliers, the primary contributor to the recovery is the growing rate of vaccination. Unemployment rate is down to 7 per cent in November 2021, a gradual dip from 11.84 per cent in May 2021.
“Also, amidst the pandemic, hiring by IT companies has gathered pace followed by robust performance of the sector which will only add on to the demand for the co-living in coming quarters,” he said.
The Nasdaq-listed Colliers in its report has mentioned that between December 2020 and March 2021, the occupancy in most co-living facilities crossed the 45-50 per cent mark as the market improved. However, the second wave proved to be a dampener from Q2 (April-June) onwards as occupancy dipped sharply.
Occupancy levels
Occupancy levels are expected to be in the 60-70 per cent range for the year.
In 2020, or pandemic year, occupancy was around 40-60 per cent with total bed availability between 130,000 and 140,000.
In 2019, the pre-pandemic year, there were 200,000 plus beds available in the co-living segment; with the average occupancy being around 85-90 per cent.
For all groups – corporate occupiers, start-ups, entrepreneurs, and millennials – renting offers flexibility and savings. Co-working offers cost savings of 20-25 per cent compared to traditional office space leasing.
The lucrativeness of a higher yield compared to a traditionally rented house has resulted in an influx of new players every year where this trend is expected to continue for the next few years. Co-living offers attractive returns – 2-4 times higher than the traditional residential yield of 2-3 per cent, the report added. Post the pandemic, many players are re-drawing their strategies.